Startups Meet with Investors and Strategics at LSI Medtech Conference

by James Cavuoto, editor

March 2023 issue, Neurotech Business Report

More than 2,000 medical device industry executives, entrepreneurs, and investors assembled in Dana Point, CA earlier this month for the 2023 LSI Emerging Medtech Summit. The neurotech industry was well represented at the event.

One of the unique features of this conference is the insight it offers into the dealmaking process. Several panel discussions featured medtech executives and venture capital professionals who shared details on acquisitions or investment rounds that they participated in previously.

A session called “Spilling the Tea: What Really Happens in Device Deals” featured Chris Cleary, vice president of corporate development at Medtronic, Rak Mehta, a partner at Centerview Partners, and Erich Wolff, senior vice president of corporate development strategy at Becton Dickinson. The panelist knew each other well from past deals they had done together and they shared some humorous anecdotes from their experience. “The first thing you should know about these two is that they’re not very nice people,” Mehta said in jest. He related a personal story he had shared with the pair about a house his family wanted to buy, but the broker used the offer to secure a higher price from another buyer. They offered him no sympathy but reminded him of some previous M&A deals where they felt they were on the receiving end of Mehta’s maneuvering.

A session titled “Where’s the Money? Raising from a New Regime in 2023” featured several venture capital professionals and dealt with some of the headwinds confronting medtech startups in this economic climate. Allan May, founder of Life Science Angels, encouraged entrepreneurs to remain steadfast despite the gloomier economic conditions of this year compared to last. “Public markets have dried up, liquidity has dried up. That means that venture funds don’t invest as much, particularly in new companies. They tend to save their capital for portfolio companies. So when that happens, whatever your 2022 pitch was, save that for 2024,” he said. “The good news is, the brunt of this is going to fall on later-stage companies with higher valuations.”

May advised startups to do their homework scouting the investment landscape. “Ten years ago, we knew all of the investors in our space,” he said. “Today we don’t,” he said. “You need to find them, because deals are being done in nontraditional ways.”

Jenny Barda from Features Capital said her firm invests in the “first in human space.” Martin Gershon from Endeavor Venture Funds described his venture studio. “We take a very hands-on approach to investing in healthcare companies that are specifically looking at outcomes,” he said. Gershon is a trained oncologist and former FDA attorney.

Neurotech firms presenting at the meeting included NextSense, Neuronoff, Pixium Vision, Zeto, INBRAIN Neuroelectronics, Kurve Therapeutics, Stimdia Medical, Inner Cosmos, Zentrela, NeuroSigma, and MicroTransponder. A seed-stage company called NeuraStasis is developing a noninvasive electrical stimulator for stroke rehabilitation. The company’s BlueStem device engages cerebrovascular and brainstem reflexes to improve ischemic conditions and promote neuroplasticity. The therapeutic regimen combines trigeminal and vagus nerve stimulation using pulses electrical current. CEO Kurt Gill likened the device to an AED system, but for use after a stroke, rather than a cardiac event.

A panel discussion devoted to Alzheimer’s disease featured executives from Kurve Therapeutics, Braingrade, Sinaptica Therapeutics, and Cognito Therapeutics. Cognito CEO Brent Vaughan was optimistic about role that medtech devices could continue to play in this space. “We’re going to see more progress in this area in the next 24 to 36 months than we saw in the last 20 years,” he said.

Rich Macary, president of Sinaptica, described his transition from the biopharma world to neurotech devices. Prior to cofounding Sinaptica, he was a senior executive a the biotechnology firm Sarepta Therapeutics, which uses RNA based therapies and genetic medicines to target rare diseases. He also served as president of Delos Ventures, where he launched a collaboration with Mayo Clinic.

Sinaptica’s SinaptiStim system enhances neuroplasticity via closed loop TMS/EEG stimulation directed at key brain networks involved with memory. It was granted FDA breakthrough device designation last year. The company announced publication of Phase II study results in the journal Brain.